UK Inflation Surges to Highest Rate Since March Amid Energy Price Hike

UK inflation has surged to its highest rate since March after energy prices rose sharply due to the Iran war, according to official figures. The Consumer Prices Index (CPI) inflation rate jumped to 2.9% in July from a 15-month low of 2.6% in June.

The increase was largely driven by the 13% hike in Ofgem's energy price cap last month, which raised the average gas and electricity bill by £221 to £1,862 a year. The largest rise in gas prices in almost four years contributed to this increase.

Chancellor John Healey attributed the impact of the Iran war on UK prices, saying 'the conflict continues to impact prices here at home.' He also noted that the government has taken steps to alleviate pressure, such as cutting VAT on electricity bills and capping bus fares at £2.

Economists warn that inflation may continue to rise as energy costs are expected to increase further due to the ongoing conflict. Ofgem will announce the next price cap level for October to December on August 26, with forecasts suggesting a 4% rise is likely, taking the average tariff to £1,941.